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FAR EASTERN UNIVERSITY

STATEMENT OF CASH FLOWS


FINANCIAL ACCOUNTING AND REPORTING III

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Midterms Quiz 2

1. Conrad Co.uses the direct method to prepare its statement of cash flows. Conrad had the
following cash flows during 2018

Cash receipts from issuance of ordinary shares 800,000.00


Cash receipts from customers 400,000.00
Cash receipts from dividends in long term investments 60,000.00
Cash receipts from repayment of loan made to another company 440,000.00
Cash payments for wages and other operating expenses 240,000.00
Cash payment for insurance 20,000.00
Cash payments for dividends 40,000.00
Cash payments for taxes 80,000.00
Cash payment to purchase land 160,000.00
What is the net cash provided (used) from operating activities?
a. (P40, 000) b. P60, 000 c. P80,000 d. P120, 000 e. None of the choices

2. Roe Co. is preparing Statement of cash flows for the year ended December 31, 2018. The
following account balances are gathered:

12/31/2017 12/31/2018
Machinery 2,500,000.00 3,200,000.00
Accumulated Depreciation 1,020,000.00 1,200,000.00
Loss on sale of machinery 40,000.00
During 2018, Roe sold for P260, 000 a machine that cost P400, 000 and purchased several items
of machinery.
1. What was the depreciation of machinery for 2018?
a. P180,000 b. P240,000 c. P280,000 d. P320,000 e. None of the choices
2. What was the amount of machinery purchased in 2018?
a. 340,000 b. P700, 000 c. P960,000 d. P1,100,000 e. None of the choices
3. Using the information in #2, supposed that the machine’s selling cost was P260, 000, what
was the amount of machinery purchased in 2018?
a. 340, 000 b. P700, 000 c. P960, 000 d. P1, 100, 000 e. None of the choices
4. Using the information in #2, supposed that the company was not able to sell any machine,
what was the amount of machinery purchased in 2018?
a. 340, 000 b. P700, 000 c. P960, 000 d. P1, 100, 000 e. None of the choices
FAR EASTERN UNIVERSITY
STATEMENT OF CASH FLOWS
FINANCIAL ACCOUNTING AND REPORTING III

3. Debbie Co. provided the following data:

2018 2017
Cash 350,000.00 150,000.00
Accounts Receivable, net 840,000.00 580,000.00
Merchandise Inventory 660,000.00 420,000.00
Prepaid Expenses 50,000.00 100,000.00
Long Term Investment 80,000.00 -
Property, Plant and Equipment 1,130,000.00 600,000.00
Accumulated Depreciation 110,000.00 50,000.00
Accounts Payable 530,000.00 440,000.00
Accrued Expenses 140,000.00 130,000.00
Dividends Payable 70,000.00 -
Notes Payable-Long Term debt 500,000.00 -
Share Capital 1,200,000.00 900,000.00
Retained Earnings 560,000.00 330,000.00
Net Credit Sales 6,400,000.00 4,000,000.00
Cost of Goods Sold 5,000,000.00 3,200,000.00
Expenses 1,000,000.00 520,000.00
Net Income 400,000.00 280,000.00

All accounts receivable and accounts payable relate to trade merchandise. Accounts payable are
recorded net and always paid to take all the discounts allowed. The allowance for doubtful accounts at
the end of 2018 was the same as at the end of 2017. No receivables were charged against the allowance
during 2018. The proceeds from the note payable were used to finance a new store building. Share
capital was sold to provide additional working capital.

1. What is the amount of cash collections from customers in 2018?


a. P5.56M
b. P5.85M
c. P6.14M
d. P6.4M
e. None of the choices

2. What is the amount of cash payments to merchandise creditors in 2018?


a. P4.67M
b. P4.91M
c. P5M
d. P5.15M
e. None of the choices

3. What is the net cash provided by operating activities?


a. P.4M
b. P.1M
FAR EASTERN UNIVERSITY
STATEMENT OF CASH FLOWS
FINANCIAL ACCOUNTING AND REPORTING III

c. P.2M
d. d. P.11M
e. None of the choices

4. What is the net cash provided by financing activities?


a. P.14M
b. P.3M
c. P.5M
d. P.7M
e. None of the choices

5. What is the net cash provided by investing activities?


a. P80, 000
b. P530, 000
c. P610, 000
d. P660, 000
e. None of the choices

4. Flax Co. uses the direct method to prepare its statement of cash flows. Flax’s trial balances are as
follows:

2018 2017
Cash 350,000.00 320,000.00
Accounts Receivable 330,000.00 300,000.00
Inventory 310,000.00 470,000.00
Property, Plant and Equipment 1,000,000.00 950,000.00
Unamortized bond discount 45,000.00 50,000.00
Cost of Goods Sold 2,500,000.00 3,800,000.00
Distribution costs 1,415,000.00 1,720,000.00
General and administrative Expenses 1,370,000.00 1,513,000.00
Interest expense 43,000.00 26,000.00
Income tax expense 204,000.00 612,000.00
7,567,000.00 9,761,000.00

Allowance for doubtful accounts 13,000.00 11,000.00


Accumulated depreciation 165,000.00 150,000.00
Trade accounts payable 250,000.00 175,000.00
Income Tax payable 210,000.00 271,000.00
Deferred Tax liability 53,000.00 46,000.00
8% callable bonds payable 450,000.00 200,000.00
Ordinary share capital 500,000.00 400,000.00
Share premium 91,000.00 75,000.00
Retained Earnings 447,000.00 646,000.00
FAR EASTERN UNIVERSITY
STATEMENT OF CASH FLOWS
FINANCIAL ACCOUNTING AND REPORTING III

Sales 5,388,000.00 7,787,000.00


7,567,000.00 9,761,000.00
Flax purchased P50, 000 in equipment during 2018.
Flax allocated one-third of its depreciation expense to distribution costs and the remainder to
general and administrative expenses. What amounts should Flax report in its statement of cash
flows for the year ended December 31, 2018 for the following?
1. Cash collected from customers?
a. P5, 418, 000
b. P5, 416, 000
c. P5, 360, 000
d. P5, 358, 000
e. None of the choices

2. Cash paid for goods to be sold?


a. P2, 585, 000
b. P2, 575, 000
c. P2, 425, 000
d. P2, 265, 000
e. None of the choices

3. Cash paid for interest?


a. P48, 000
b. P43, 000
c. P38, 000
d. P17, 000
e. None of the choices

4. Cash paid for income tax?


a. P258, 000
b. P204, 000
c. P197, 000
d. P150, 000
e. None of the choices

5. Cash paid for distribution costs?


a. P1.42M
b. P1.415M
c. P1.41M
d. P1.4M
e. None of the choices